Shareholders' Equity

3 Months Ended

Mar. 31, 2023

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Mezzanine Equity

On February 28, 2023, the Company and certain accredited investors (the “Investors”), entered into subscription agreements (the “Subscription Agreements”) to sell shares of Series A Preferred Stock of the Company, par value $0.001 per share (“Preferred Shares”) in a private placement (the “Private Placement”). The Private Placement priced at the official closing price of the New York Stock Exchange on March 1, 2023, which was $37.71. On March 20, 2023, we closed the Private Placement and issued 6,605,671 Preferred Shares and received gross proceeds of $249.1 million. We incurred $0.5 million of issuance costs and intend to use the net proceeds of $248.6 million to fund our growth capital program and for general corporate purposes. We initially used the net proceeds to repay borrowings under our senior secured revolving credit facility.

Each Preferred Share is convertible into one share of common stock of the Company, par value $0.001 per share, subject to adjustment for any stock dividends, splits, combinations, and similar events, and will automatically convert into common stock upon shareholder approval of the conversion by a majority of the votes cast, which is expected to be obtained on or before June 15, 2023. The Subscription Agreements contain customary representations, warranties, and covenants of the Company and the Investors, including an agreement by the Company to seek shareholder approval of the issuance of common stock to the Investors. On February 28, 2023, the Investors entered into a voting agreement, pursuant to which they agreed to vote shares of common stock held by them in favor of the conversion.

The Preferred Shares are redeemable only upon the occurrence of a deemed liquidation event where the holders would be entitled to receive cash or the value of the property, rights or securities paid or distributed to such holders by the Company or the acquiring person, firm or other entity. Effecting a deemed liquidation event would require approval of the board of directors of the Company (the “Board) and the holders control the Board. As the occurrence of a deemed liquidation event is not solely within our control, the Preferred Shares are presented as mezzanine equity. As the Preferred Shares are not currently redeemable or probable of becoming redeemable, their balance continues to be recorded at their gross proceeds, net of their issuance costs.

The holders of the Preferred Shares are entitled to participate equally and ratably with the holders of the common stock in all dividends or other distributions on the shares of common stock. The Preferred Shares rank senior in preference and priority to all classes or series of common stock with respect to dividend rights and rights upon liquidation, dissolution, or winding up of the Company. As the Preferred Shares do not share in our losses, no adjustment was required to our net loss per common share.

On March 20, 2023, in connection with the closing of the Private Placement, the Company and Investors entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to file and maintain a registration statement with respect to the resale of the shares of common stock issuable upon conversion of the Preferred Shares on the terms set forth therein. The Registration Rights Agreement also provides certain Investors with customary piggyback registration rights.

Shareholders’ Equity

Dividend Reinvestment

Pursuant to a dividend reinvestment plan with respect to a portion of the shares of common stock held by our former sponsor, we issued 188,321 shares of common stock in lieu of cash dividends of $8.7 million during the three months ended March 31, 2023 and 110,387 shares of common stock in lieu of cash dividends of $7.8 million during the three months ended March 31, 2022. See Note 15, Equity - Simplification Transaction to the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

Cash Dividends

During the three months ended March 31, 2023, we declared dividends of $0.905 per common share totaling $60.9 million. During the three months ended March 31, 2022, we declared dividends of $0.86 per common share totaling $59.0 million.